The .pc file is the source code of your application. The .pc file
can be read by PDE but is neither necessary nor handled by the
PocketC compiler on the Palm. If you like to continues your development
on the handheld device for roadcoding, you'll have to copy&paste
the sourcecode from PDE to a memo (see documentation).

if you mark both checkboxes in the compile dialog of PDE
your application will run without PocketC necessary on the
device (PocketC is merged into your app as a runtime than).
If you, however, check only the first checkbox ("Generate
.prc (executeable)") PocketC is required on the device in
order to provide the runtime.